Billabong head quits in $294m lifeline deal

Eric Johnston and Matt O'Sullivan

Billabong International chief executive Launa Inman will step down after just 13 months in the role as part of a complex $294 million refinancing deal giving the struggling surfwear group a lifeline. A consortium led by private-equity interest Altamont Capital Partners will inject the funds into Billabong to refinance its debts.

Investors associated with Altamont and Blackstone Group entered the agreement that will allow Billabong to repay in full its syndicated debt facilities. As part of the deal, Billabong will also sell its Dakine brand to Altamont for $70 million.

Still standing: A consortium is injecting capital into Billabong to refinance its debts. Photo: Glen Hunt

Even so, the Altamont consortium could expected to emerge with between 36 per cent and 40 per cent of Billabong as part of an options agreement under the refinancing package. The financing transaction will be subject to approval from existing Billabong shareholders, with a date for the meeting yet to be confirmed.

Stepping in to take charge of Billabong will be Scott Olivet, a former chairman and chief executive of US sportswear group Oakley. Mr Olivet has also held executive roles with Nike, heading up several of the group's key brands.

''The board believes that the Altamont consortium's refinancing, and the changes being announced provide the company with a stable platform and the necessary working capital to continue to address the challenges it faces,'' Billabong chairman Ian Pollard said.

''The Altamont consortium presented the best available, certain and executable opportunity in these challenging circumstances,'' he said.

''The transaction reflects the Altamont consortium's confidence in the value of Billabong's brand.''

Billabong has lost 76 per cent of its market value over the past year. It placed its shares in a trading halt on Tuesday, citing developments in refinancing and asset-sale plans. Billabong shares last traded at 25¢ before entering into the trading halt.

Billabong said last month it was looking to sell its Canadian retail chain West 49 after the company breached terms on its debt. Since then, the retailer has been in talks with Altamont over a possible refinancing and asset-sale deals to repay loans. Five members of its banking syndicate have already sold out of their loan holdings.

The company, whose market value rose as high as $3.8 billion in June 2007, is now valued at about $120 million after efforts to cut costs, including shutting stores, cutting staff, and selling new shares to raise cash. A slump in its home market and the weak European economy have weighed on earnings.

Billabong has $651 million in debt facilities due to be repaid by July next year, with $152 million of net debt drawn at the end of December.

Dr Pollard paid tribute to Ms Inman. ''The board wishes to thank Launa for her contributions to the company and her resilience during the most difficult period in the company's history,'' he said.